In the second half of his term President Jimmy Carter signed a series of laws deregulating shipping and transportation in the United States. The Staggers Act, signed into law in 1980, would deregulate rail freight shipping. The law eliminated the government price fixing by the Interstate Commerce Commission and instead allowed the carriers to set their own rates. This deregulation allowed the freight railroad network in the United States to flourish, while in contrast the government controlled Amtrak passenger rail system has floundered.
The collective bargaining agreement that governs the wages, benefits, and work rules for the over 125,000 unionized employees of the major freight carriers was due to be renegotiated and agreed on this year. After over a year of failed negotiations, a presidential emergency board (PEB) was appointed by President Joe Biden.
During presentations to the PEB, inflation was a major talking point for both sides. The rail carriers argue that recent, record high inflation rates should not be considered as a guide for setting the cost of living adjustment. They argue it’s is an anomaly due to “the war in the Ukraine, lockdowns in China, COVID-related supply chain disruptions and government programs sending large amounts of money to people.”1 PED 250 – Report and Recommendations – Page 21 The labor unions responded that the Consumer Price Index (CPI) is already 16.8% higher2 PED 250 – Report and Recommendations – Page 16 than when the last collective bargaining agreement ended in December 2019. The board submitted their report on August 16 when it was surprisingly met with a positive reception by the railroad carriers and negatively received by the labor unions. Eventually, all of the labor unions agreed to proposals based largely on the PEB’s recommendation and sent the agreements to their members to be ratified.
The deal reached increased the workers’ wages by 24% percent (17% of which has already been devoured by inflation. The remaining 7% increase is sure to be erased by the easy spending and money printing policies of the federal government. In effect, the labor unions have agreed to cut the real wages of their workers over the life of the agreement. This shows in perfect clarity the cooperation between big labor and big government in ensuring a compliant working class becomes more reliant on the welfare state.
Left-wing anarchist Sam Weiner wrote in 1958, “A State-regulated economy needs a State-regulated labor movement. The government will help the unions so long as the leaders can assure the smooth cooperation of a docile labor force.” After the publication of the PEB, Railroad Workers United, a blanket organization covering all of the labor unions in the bargaining unit, issued a statement saying, “On most of the important and pressing quality of work-life issues—the ones that probably matter the most in terms of job satisfaction, recruitment, and retention of railroad workers—the PEB simply chose to kick the can down the road, remanding the carriers and the unions to reach an agreement.” Why would the labor unions agree to such a bad deal for their constituents?
Labor unions have been heavily involved in Democrat Party politics. One of the largest unions in the bargaining unit, the Sheet Metal, Air, Rail & Transportation Union’s political action committee gave $1,223,000 to congressional candidates during the last election cycle, with over 98% going to Democrat Party candidates. With the unions’ favored party in control of both chambers of Congress and the executive branch, how hard can the unions complain about the recommendations given by that government? Would these unions really have been willing to bring freight rail traffic in the United States to a halt, further damaging an already shaky economy, leading up to the midterm elections?
Labor unions take money, in the form of dues, from their members, most of whom do not have a choice in what labor union they belong or if they even wish to be represented by a third party at all, and then give that dues money to politicians. The politicians then print more money, given first to their friends in the banking industry while eroding the real wages of the working man they supposedly support.
In 1966 the great economist Murray Rothbard aptly summarized the state of big labor and big government cooperation in reducing the real wages of the working class:
The reason is precisely that frankly advocated by Lord Keynes, the economist-saint of modern state capitalism, and, it should be noted, of all the Old Left: to lower real wage rates by fooling the workers into thinking that their wages are rising when, in terms of real purchasing power, they are being lowered. Hence we see the acumen of Mr. Weiner’s analysis of the current system of “state capitalist ‘welfarism'”: that the function of labor unionism in the system is to serve as the ‘labor front’ for “maximum centralization of control over the working class.” And, further, we see that the Keynesian-New Deal-Fair Deal New Frontier-Great Society program of perpetual inflation is an integral part of this control and exploitation of the mass of workers.
This is not a new phenomena but rather one that has been going on for decades. The government debases the currency and unions negotiate for “wage increases” that amount to nothing more than a loss in purchasing power. The government relies on unions to maintain a pliant working class while the unions rely on the government to protect them from having to compete in a free market where they can be tossed aside for negotiating agreements that leaves their workers worse off.
Two of the labor unions representing approximately 32,000 voted to reject the agreement. Two of the largest unions in the bargaining unit are still in the voting and vote counting process. A rail strike that would have devastating consequences for the economy was avoided before the midterm elections. However, if more of the rail workers union members are waking up to the fact that their union bosses are colluding with the government to keep them docile while eroding their real wages then the strike might end up shocking the economy during the peak of the holiday season.